DT4630.13 - Canada: double taxation agreement, Article 13: Capital gains
(1) Gains derived by a resident of a Contracting State from
the alienation of immovable property situated in the other
Contracting State may be taxed in that other State.
(2) Gains from the alienation of movable property forming
part of the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State or of movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State
for the purpose of performing professional services, including such
gains from the alienation of such a permanent establishment (alone
or with the whole enterprise) or of such fixed base, may be taxed
in that other State.
(3) Gains derived by a resident of a Contracting State from
the alienation of ships or aircraft operated in international
traffic or movable property pertaining to operation of such ships
or aircraft, shall be taxable only in that Contracting State.
(4) Gains from the alienation of:
- any right, licence or privilege to explore for, drill for, or
take petroleum, natural gas or other related hydrocarbons situated
in a Contracting State, or
- any right to assets to be produced in a Contracting State by the activities referred to in sub- paragraph (a) above or to interest in or to the benefit of such assets situated in a Contracting State, may be taxed in that State.
(5) Gains from the alienation of:
shares, other than shares quoted on an approved stock
exchange, deriving their value or the greater part of their value
directly or indirectly from immovable property situated in a
Contracting State or from any right referred to in paragraph 4 of
this Article, or
an interest in a partnership or trust the assets of which
consist principally of immovable property situated in a Contracting
State, of rights referred to in paragraph 4 of this Article, or of
shares referred to in sub-paragraph (a) above, may be taxed in that
State.
(6) The provisions of paragraph 5 of this Article shall not
apply:
in the case of shares, where immediately before the
alienation of the shares, the alienator owned, or the alienator and
any persons related to or connected with him owned, less than 10
per cent of each class of the share capital of the company; or
in the case of an interest in a partnership or trust, where
immediately before the alienation of the interest, the alienator
was entitled to, or the alienator and any persons related to or
connected with him were entitled to, an interest of less than 10
per cent of the income and capital of the partnership or trust.
(7) For the purposes of paragraph 5 of this Article:
the term 'an approved stock exchange' means a stock exchange
prescribed for the purposes of the Canadian Income Tax Act or a
recognised stock exchange within the meaning of the United Kingdom
Corporation Tax Acts; and
the term 'immovable property' does not include any property
(other than rental property) in which the business of the company,
partnership or trust was carried on.
(8) Gains from the alienation of any property, other than
that referred to in paragraphs 1, 2, 3, 4 and 5 of this Article
shall be taxable only in the Contracting State of which the
alienator is a resident.
(9) The provisions of paragraph 8 of this Article shall not
affect the right of a Contracting State to levy according to its
law a tax on or in respect of gains from the alienation of any
property on a person who is a resident of that State at any time
during the fiscal year in which the property is alienated, or has
been so resident at any time during the six years immediately
preceding the alienation of the property.
(10) Where an individual ceases to be a resident of a
Contracting State and by reason thereof is treated under the laws
of that State as having alienated property before ceasing to be a
resident of that State and is taxed in that State accordingly and
at any time thereafter becomes a resident of the other Contracting
State, the other Contracting State may tax gains in respect of the
property only to the extent that such gains had not accrued while
the individual was a resident of the first-mentioned State.
However, this provision shall not apply to property, any gain from
which that other State could have taxed in accordance with the
provisions of this Article, other than this paragraph, if the
individual had realized the gain before becoming a resident of that
other State. The competent authorities of the Contracting States
may consult to determine the application of this paragraph.
